AFP Press Release

Build out of cash reserves expected to slow slightly in coming quarter

MIAMI – October 14, 2012– U.S. corporate
treasurers, like the rest of the world, are in a wait-and-see mode and are not
yet deploying their cash reserves.In
fact, they are continuing to build cash reserves for their organizations,
according to the AFP Corporate
Cash Indicators™ (AFP CCI), a
quarterly study that measures recent and anticipated changes in U.S. corporate
cash balances. In this environment, companies
continued to build cash and short-term investment balances during the third
quarter of 2012.

Quarter-to-quarter, 40 percent of reporting
organizations had greater cash balances at the end of 3Q12 than they had at the
end of 2Q12. Meanwhile, 26 percent had
cut cash reserves.

The study, underwritten by State Street
Global Advisors, was released today at the AFP Annual Conference in Miami.

Companies reported that their investment
selection for cash and short-term investments had become neither more nor less
aggressive.

Year-over-year, cash hoarding increased,
with 40 percent holding greater balances at the end of 3Q12 than they had at
the end of the 3Q11.

Looking forward, the build out of cash
balances will slow slightly from current levels—33 percent of organizations
expect to build cash and short-term investment balances over the next three
months, while 21 percent plan to reduce these balances.

“This sidelined cash is withholding the
fuel for economic growth,” said Jim Kaitz, AFP’s president and CEO. “This is
the money that companies would use for new projects, expansion, R&D, and,
ultimately, job creation.Only when
uncertainty dissipates, confidence in the economy improves, and companies
release their cash will the job picture significantly improve.”

The AFP CCI™ provides treasury and finance
professionals, policymakers and market analysts with timely data on a
determinant of economic activity: corporate cash. The AFP CCI™ is created and
maintained by the Association for Financial Professionals (AFP), a professional
society that serves corporate finance departments globally.

Methodology: On the opening days of each
quarter, AFP asks select members whether their short-term holdings increased or
decreased in the past year and past quarter; whether investment selections for
those holdings changed in the last quarter; and whether they expect cash
holdings to increase or decrease in the coming quarter. For consistency, AFP
asks the same questions each quarter. AFP members have agreed to participate in
this ongoing study on a long-term basis.

AFP began collecting quarterly data in
January 2011 and has now collected eight data sets. For more information. See www.afponline.org/CCI.The next
set will be published in the January 28, 2013 issue of AFP EconWatch newsletter (www.AFPonline.org/econwatch).

AFP
Corporate Cash Indicators™ is a trademark of the
Association for Financial Professionals. All AFP Corporate Cash Indicators™ survey questions and
reports are the copyrights of the Association for Financial Professionals, and
all rights are reserved. For information
about publishing the CCI on your site, see www.afponline.org/CCI
or contact pr@afponline.org.

ABOUT AFP® (www.afponline.org)

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